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This paper compares the increases in access rates to piped water in rural Brazil by localized water supply systems under two different management models. It finds that small-scale supply systems operated and maintained by user associations lead to significantly higher increases in access rates than comparable systems implemented and operated by local governments. Additional results point towards higher accountability as the reason for better performance. This paper is the first to evaluate the success of community-based water supply projects in rural areas by comparing them to non-participatory projects and is based on a valid econometric identification strategy. As service delivery is decentralized in Brazil, the results also contribute to the discussion of the merits and risks of decentralized water supply. In order to overcome the endogeneity problem, I use a difference-in-difference estimator in combination with a kernel matching approach. Treatment effects are robust to various specification changes; tests show no structural differences between treatment and control groups.

This study analyzes the affordability and distributional implications of water tariff reforms for poor water customers under means-tested tariffs in comparison to increasing block tariffs (IBTs) using volumetric targeting. For this purpose, we employ a unique data set for Lima, Peru. Our analysis reveals that from a pro-poor perspective, the performance of means-tested tariffs is mixed. On the one hand, they distribute more income to poor households than the IBTs, given the assumption that the overall revenue to the water supplier remains constant. On the other hand, the share of poor customers who actually benefit from water subsidies declines with means-testing. Nevertheless, means-tested tariffs clearly outperform IBTs in terms of excluding non-poor customers from being subsidized. These findings should be generalized with care as the performance of the tariff crucially depends on the cut-off value for cross-subsidies and the block prices chosen under volumetric targeting and on the design of the means-test. Our analysis further suggests that a proper assessment of individual welfare effects should take household size into account and rest on a broad set of affordability and distributional indicators. Interestingly, our results are relatively insensitive to the price elasticity of water demand.

We analyze the impact of access to piped water on human capital formation as measured by test scores from standardized school exams at Brasilian primary schools. We fi nd a positive and signi ficant eff ect of around 11 percent of the standard deviation of mean test scores. The eff ect of piped water on test scores increases with the level of education of the mother. This complementarity is more pronounced for families with income below average income and vanishes for families with income above mean. This allows important policy recommendations. Developing countries should focus infrastructure expansion on low income areas and complement them with educational interventions for families with low educational background to increase returns on investment.